Late last month the Watsons received a letter from Dean Foods, the company that purchases approximately 2,000 gallons of milk from them a day, saying the company would be terminating the contract with the farm in 90 days. Dean Foods will stop purchasing their milk on May 31.
The Watsons were among 11 farms across East Tennessee and over 140 farmers across the country who received a letter from Dean Foods. Farmers in Indiana, Kentucky, Pennsylvania, Ohio, New York, North Carolina and South Carolina also received letters.
The company cited an overabundance of milk in the market as reason for the cuts. Dean Foods subsidiary companies include Purity, Mayfield Dairy, Land O’Lakes, Dairy Pure, TruMoo and many other regional and national brands.
Caleb Watson, 37, competed on the TV show “American Ninja Warrior” in 2016, something he plans to try again. These days his beard is unkempt. His boots are layered with cow manure. His hat is crooked. His accent is long.
He said it was “kind of dirty” the way Dean Foods treated him and other dairy farmers.
“Ninety days ain’t much for a dairy farmer to make a decision like this,” he continued. “We got crop season coming up. Do we plant corn for the cows or do we plant corn to harvest the corn and sell the corn? Give us more time is what I would like to say.”
The Watsons have nearly 330 head of cattle that feed in a barn that has “JESUS IS LORD” written on the top so you can read it from the road. They also grow wheat, corn and soybeans on their 1,200-acre farm.
The brothers have been going back and forth for years on which portion of their family farm is most profitable, dairy or crops. Either can have a good or bad year. Caleb thinks dairy is more profitable.
Soon though, it won’t matter.
When asked if his son, who is 2, will have the opportunity to be a dairy farmer like his father, Watson sighs.
“Well, as of now, no. No, not at all,” he said. “We’ll be here. We’ll make a living, you know. But the cows look like they won’t be here.”
The market is milked
Dean Foods Director of Corporate Communications Reace Smith said in an emailed statement that the company’s decision was “an incredibly difficult one and a step that we worked very hard to avoid.”
“It’s important to note we still buy milk that comes from approximately 12,000 farms across the country, including Tennessee,” he said.
According to Smith, Americans drink approximately three gallons less of milk than they did in 2010 and the U.S. dairy industry is producing roughly 350 million gallons more milk each year. Ultimately though, it was new plants coming into the market when there is a surplus of milk that forced Dean’s hand, he said.
“The fluid milk market has always been competitive, but we’re in unprecedented times,” he said. “These things coming together have put all of us in the situation we find ourselves today.”
Julie Walker serves as the agriculture communications coordinator of AgCentral Farmers Cooperative in East Tennessee. She said 11 farms, all in East Tennessee, have gotten a letter from Dean Foods.
Dairy farms are in a catch-22, she said. They have to supply enough milk to make money, but so does every other dairy farmer and with a down market it is easily saturated. This impacts small, family farms the most, she said.
“Farm families who have owned herds for generations are ceasing dairy operations, and for them, it is the equivalent of a UT football fan all of a sudden becoming an Alabama fan, or not a football fan at all,” she said. “It is not only a farm business change, it’s a life culture change.”
Walker recently created a Facebook page, Tennessee Dairy Forum, to keep farmers across the state updated on the news of cuts.
Part of the overproduction of milk comes from larger farms that aren’t family operations. They can produce milk by bulk, which lowers the price.
Tom Womack, deputy commissioner of the Tennessee Department of Agriculture, said farms in the Midwest and Western United States can produce and ship milk cheaper and sometimes fresher than farms in Tennessee can because of the economy of scale.
Womack said dairy farms are capital intensive and require a lot of labor, two positive things for local economies. For that reason, he said, dairy farms often have a greater impact on local economies than other farms.
Walker said Dean’s actions put smaller farms, 50-300 head of cattle, across the state and region at risk.
“My papaw could work hard and make a living,” Watson said. “That’s kind of hard to do now because all of these people are so big … that bigger dairy, where it takes us seven hours to milk in this smaller barn, he can do it in two hours. They can do it cheaper than we can do it.
“That’s what it’s boiled down to, man, and I’m not fussing about it,” he continued. “If you can’t keep up with them, bye-bye, you know. That’s the way I see it.”
Overall, there isn’t much Womack and the state can do, he said.
“We’re going to continue to press ahead and see anything we can do that might help address the situation,” he said.
For as long as Clifford Beaty can remember, he’s loved Harley-Davidson motorcycles. Thanks to his termination letter from Dean Foods, he will get the chance to ride this summer.
Beaty, 61, has sold his milk to Dean Foods since 2010. He owns 53 acres of land that is paid for and roughly 150 cattle. He leases another plot of land nearby.
Unlike the Watsons, Beaty doesn’t supplement his dairy operation with crops, and he said he doesn’t have many options to pay down his debt. He plans to get out of the dairy business altogether and take up beef cattle this fall.
“Now, normally your cattle will keep you out of debt, that’s the way I always figured it,” he said Monday. “But the cattle is going to be dirt cheap and we all know it … so I’m gonna sell the 53 acres of land that’s paid for.
“As far as me coming back with dairy, it probably ain’t going to happen at my age,” he said. “But I can come back with beef cattle if I don’t change my mind. That’s all I know is cattle.”
The Watsons have 221 milk cows, about 50-60 dry cows that aren’t currently being milked and about 150 heifers. The cows will have to go somewhere, but Caleb Watson said he isn’t planning on selling anytime soon.
“No other dairy farmer wants to buy them right now because the milk (market’s) low. And like the beef business, beef is down. There’s not much options.”
Beaty’s outlet, though, is looking good. He said he plans to go to Knoxville, buy a Harley and travel the country this summer, something he’s always wanted to do. He said he might take a pit stop in Athens, at the Mayfield Dairy plant, while he’s at it.
“I want to go down to Mayfield and (urinate) right there in their yard … right now I’m pretty angry,” he said.
By: Tyler Whetstone
Source: USA TODAY NETWORK